The role of biomass and bioenergy in a future bioeconomy: Policies and facts

The role of biomass and bioenergy in a future

bioeconomy: Policies and facts

Nicolae Scarlat

, Jean-François Dallemand,

Fabio Monforti-Ferrario, Viorel Nita

European Commission, Joint Research Centre, Via E. Fermi 2749—TP 450, 21027 Ispra, VA, Italy

a r t i c l e i n f o

a b s t r a c t

The European Commission has set a long-term goal to develop a competitive, resource efficient and low carbon economy by 2050. Bioeconomy is expected to play an important role in the low carbon economy. This paper provides a review of the policy framework for developing a bioeconomy in the European Union covering energy and climate, agriculture and forestry, industry and research. The Europe has a number of well-established traditional bio-based industries, ranging from agriculture, food, feed, fibre and forest-based industries. This paper proposes an analysis of the current status of bioeconomy in the European Union and worldwide until 2020 and beyond. We estimate the current bio economy market at about€2.4 billion, including agriculture, food and beverage, agro-industrial products,fisheries and aquaculture, forestry, wood-based industry, biochemical, enzymes, biopharmaceutical, biofuels and bioenergy, using about 2 billion tonnes and employing 22 million persons. New sectors are emerging, such as biomaterials and green chemistry. The transition toward a bioeconomy will rely on the advancement in technology of a range of processes, on the achievement of a breakthrough in terms of technical performances and cost effectiveness and will depend on the availability of sustainable biomass.

&2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Contents lists available atScienceDirect

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Environmental Development

http://dx.doi.org/10.1016/j.envdev.2015.03.006

2211-4645/&2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

n_{Corresponding author. Tel.:þ39 332 78 6551; fax:þ39 332 78 9992.} E-mail address:nicolae.scarlat@ec.europa.eu(N. Scarlat).

1. Introduction

The European Commission has set a long-term goal to develop a competitive, resource efficient and low carbon economy by 2050 (COM(2011)112final) (EC, 2011a) and the green economy concept was incorporated into the general framework at different levels of EU policy. According to UNEP (2011), a green economy is defined as´low-carbon, resource efficient, and socially inclusive’, whose overall objective is ´improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities’. It aims at ‘getting the economy right’ by reducing polluting emissions, increasing resource efficiency, preventing the loss of biodiversity and valuing ecosystem services (UNEP, 2014).

The high-level horizontal strategies have enshrined the green economy concept, the main ones being the Europe 2020sflagship initiatives‘An industrial policy for the globalisation era’(EC, 2011c) and‘Resource efficient Europe’ (EC, 2011d). As stated in the former mentioned flagship initiative focused on industrial policy,´the Commission will work to promote the competitiveness of Europe’s primary, manufacturing and service industries and help them seize the opportunities of globalisation and of the green economy´. The objective of the Resource efficient Europeflagship initiative is´to support the shift towards a resource efficient and low-carbon economy that is efficient in the way it uses all resources. The aim is to decouple our economic growth from resource and energy use, reduce CO2emissions, enhance competitiveness and promote greater energy security´. In this sense, policies related to resource efficiency need to be seen as efforts for shifting towards a resource-efficient and low-carbon economy within the global context of green economy transitionEC (2011c).

In the frame of the wider concept of green economy,bioeconomyvision is centred on the use of renewable raw materials and application of research, development and innovation and industrial biotechnology in sectors such as food, feed, paper and pulp, and biofuels production. In comparison to the environmental emphasis of green economy, the bioeconomy’s focus is on new growth opportunities in both traditional and emerging bio-based sectors, while considering global challenges (e.g. raw material supply insecurity) and resource and environmental constraints (IEEP, 2014; EC, 2014). A bioeconomy entails the use of biotechnology on a large scale. The OECD definesbiotechnology as‘the application of science and technology to living organisms, as well as parts, products and models thereof, to alter living or non-living materials for the production of knowledge, goods and services’(OECD, 2014). In the European Commission’s approach, bioeconomy covers‘the production of renewable biological resources and the conversion of these resources and waste streams into value added products, such as food, feed, bio-based products and bioenergy’, including both traditional and emerging sectors, i.e.‘agriculture, forestry,fisheries, food and pulp and paper production, as well as parts of chemical, biotechnological and energy industries’(EC, 2012). This multi-sector perspective of bioeconomy differs significantly from US bioeconomy strategy’s exclusive focus on synthetic biology (US, 2012).

In order to set a framework for bioeconomy deployment, the European Commission has put forward the European strategy for building a sustainable bio-based economy as an opportunity to address several challenges, such as food security, natural resource scarcity, fossil resource dependence and climate change, with emphasis on the sustainable use of natural resources, competitiveness, socioeconomic and environmental issues. The policy model brings together several stand-alone policy areas (e.g. climate change, agricultural and industrial policy, R&D and innovation, environmental policy, etc.), as an attempt to provide an integrated response to several broad challenges—i.e. climate change; food and energy insecurity; resource constraints. A number of sectoral policies have been put in place at European level to support the development of a bio-based economy, including for instance the Biodiversity Strategy (EC, 2011b), which makes reference to the maintenance of natural capital as a critical economic asset (Mazza and ten Brink, 2012). In addition, the existing sector policy frameworks —such as agriculture, fisheries, forestry, manufacturing industry, (renewable) energy, transport, transport, water management, etc., already include sufficient elements capable of sustaining the development of green economy in the EU.

As part of a green economy, the bio-based economy plays a key role, being able to replace fossil fuels on a large scale, not only for energy applications, but also for chemicals and materials applications. The

bio-based economy integrates the full range of natural and renewable biological resources (land and sea resources, biodiversity and biological materials (plant, animal and microbial)—and biological processes. In this respect, a bio-based economy is nothing new in itself, as before the industrial revolution, economies were mainly bio-based. Biomass is already used as feedstock for example wood based materials, pulp and paper production, biomass-derivedfibres, and as biofuel feedstock (from oilcrops, starch and sugar crops). Nevertheless, the transition toward a modern bio-based economy implies challenges such as thesustainabilityof biomass raw material,efficiencyin biomass use andeconomy of scalesin biomass mobilization.

2. Policy framework for the green economy/bioeconomy

In order to keep climate change below 21C, the European Council and Parliament have set the long-term objective of reducing Greenhouse Gas (GHG) emissions in the European Union (EU) by 80–95% by 2050, compared to 1990 levels (EC, 2011a). TheRoadmap for moving to a competitive low carbon economy in 2050 (COM(2011) 112_final) set out key elements for the EU_’s climate action helping the EU become a competitive low carbon economy by 2050. This is in line with the position endorsed by world leaders in the Copenhagen and the Cancun Agreements to deliver long-term low carbon development strategies (COM(2011) 112final). The roadmap sets intermediate milestones for a cost-ef_ficient pathway and GHG emission reductions, policy challenges, investment needs and opportunities in different sectors. The analysis of different scenarios indicates that a cost effective pathway requires a 40% domestic reduction of GHG emissions for 2030 compared to 1990 levels, and 80% for 2050. The energy sector should provide an important contribution to achieving these goals, with a share of low carbon technologies in the electricity mix to increase from around 45% today, to 60% in 2020, 75 to 80% in 2030, and almost 100% in 2050 (EC, 2011c).

TheEurope 2020 Strategy(COM(2010) 2020) for growth and jobs aims to prepare the EU economy for the challenges of the next decade and to exit thefinancial crisis. Europe 2020 sets out a vision to achieve smart growth (research and in novation), sustainable growth (resource efficient and low-carbon economy) and inclusive growth (employment, productivity, social and territorial cohesion). The objectives of the strategy are supported by seven_‘flagship initiatives_’to achieve its goals, which address each priority theme: (1) Smart growth (Digital agenda for Europe; Innovation Union; Youth on the move); (2) Sustainable growth (Resource efficient Europe, An industrial policy for the globalisation era); (3) Inclusive growth (An agenda for new skills and jobs; European platform against poverty). Five headline targets have been set for the EU for 2020 on: employment; research and development; climate and energy; education; social inclusion and poverty reduction. The climate and energy targets aim at reducing greenhouse gas emissions (GHG) by 20%, increasing the share of renewables in the EU’s energy mix to 20%, and achieving the 20% energy efficiency target by 2020.

Resource Efficient Europeflagship initiative supports the shift towards a resource-efficient, low-carbon economy and to achieve sustainable growth. The aim is to‘decouple our economic growth from resource and energy use, reduce CO2emissions, enhance competitiveness and promote greater energy security’.The Roadmap for a resource-efficient Europe(COM(2011) 571) sets a framework for the actions to develop a resource efficient, sustainable economy by 2050 and proposes ways to increase resource efficiency and decouple economic growth from resource use. It sets out a vision for the structural and technological change needed to achieve by 2050, with milestones to be reached by 2020 (EC, 2011d).

The Europe 2020 Strategy calls for a bioeconomy within its Flagship Initiative‘Innovation Union’as a key element for smart growth and green economy in Europe. Innovation Union aims to focus research, development and innovation policy addressing the challenges facing the EU, such as climate change, energy and resource efficiency, health and demographic change. A new approach to advance EU research and innovation was the establishment ofEuropean Innovation Partnerships (EIPs)to speed up the development of technologies to create the conditions for economic growth and social welfare. The agricultural European Innovation Partnership (EIP-AGRI) was also set to foster competitive and sustainable farming and forestry under the principle of‘achieving more and better from less’and to ensure a steady supply of food, feed and biomaterials (EC, 2014l).

2.1. Building a EU bioeconomy

Several EU policies and initiatives have an impact on the bio-based economy: agriculture, forestry, industry, energy, environment, climate change and research and innovation. Thefirst steps toward a bioeconomy have been made in 2002 when theLife Science and Biotechnology Strategy(COM(2002) 27), was released to develop and apply life sciences and biotechnology, setting out several actions for the development of biotechnology (EC, 2002). The Strategy and Action Plan for “Innovating for Sustainable Growth: A Bioeconomy for Europe”(COM(2012) 60) aim“to pave the way to a more innovative, resource efficient and competitive society that reconciles food security with the sustainable use of renewable resources for industrial purposes”(EC, 2012). The strategy proposes a comprehensive approach to address five societal challenges through the introduction of a bioeconomy: (1) ensuring food security; (2) managing natural resources sustainably; (3) reducing dependence on non-renewable resources; (4) mitigating and adapting to climate change; (5) creating jobs and maintaining European competitiveness.

The Bioeconomy Strategy focuses on three areas: (1) investment in research, innovation and skills; (2) reinforcement of policy interaction; and (3) enhancement of markets and competitiveness in bioeconomy (EC, 2012b). In addition to the EU strategy, several EU Member States (MS) have designed national bioeconomy strategies, which are linked through the Standing Committee for Agricultural Research (SCAR) to the European Commission (M’Barek et al. 2014). A key component of the strategy is the production of food, feed, bio-based products and bioenergy and the sustainable use of renewable sources. This strategy aims to support better alignment of EU funding in research and innovation with the priorities of the bioeconomy. The Action Plan proposes the actions to be carried out for the development of bioeconomy markets along three directions: (1) promotion of research and innovation; (2) enhancing synergies and coherence between policies; (3) the development of bioeconomy markets and competitiveness. The Action Plan focuses in particular on cross-sectoral and multi-disciplinary approaches, developingJoint Programming Initiatives (JPIs)and ERA-Netactivities and support bioclusters andKnowledge and Innovation Communities (KICs).

A European Bioeconomy Panel has been set up to support synergies and coherence between different policy areas, to provide a discussion platform and framework to support the implementation of the strategy, to propose European joint actions and monitor and evaluate progress made (EC, 2012b). ABioeconomy Observatorywas established at the Joint Research Centre (JRC) to gather data and indicators to assess the progress of bioeconomy markets and socio-economic, scientific, technological, market and legislation impact. It shall produce foresights and forecasts on bio-economy, scenario analyses for aiming at supporting policies and derive research and innovation directions. The observatory has three main pillars which aim to gather data on: (1) investments in research, innovation and skills; (2) policy interaction and stakeholder engagement; and (3) markets and competitiveness (M’Barek et al. 2014).

2.2. Energy and climate change

The development of a EU energy policy started with the Green Paper ‘A European Strategy for Sustainable, Competitive and Secure Energy”(COM(2006) 105) following the request of the European Council to develop along term and coherent energy policy(EC, 2006). The European Council adopted in 2007 ambitious energy and climate change objectives for 2020: to reduce GHG emissions by 20%, to increase the share of renewable energy to 20%, and to make a 20% improvement in energy efficiency compared to the baseline projection. The European Council has also made a long term commitment to the decarbonisation of the economy, with a target to achieve 80% to 95% reduction in CO2emissions by 2050. The 2020 energy and climate goals have been incorporated into the“Europe 2020 Strategy for smart, sustainable and inclusive growth”and into itsflagship initiativeResource efficient Europe. The integratedEnergy and Climate Changepackage (2007) includes the energy and climate goals: Energy policy for Europe(COM(2007) 1final) (EC, 2007a) andLimiting Global Climate Change to 21C— The way ahead for 2020 and beyond(COM(2007) 2final) (EC, 2007b).

TheEnergy 2020_—A strategy for competitive, sustainable and secure energy(COM(2010) 639) de_fines the energy priorities and sets the actions of an energy strategy until 2020 (EC, 2010b). The Energy 2020 strategy identifiesfive energy priorities: reduce energy consumption; build internal market and develop infrastructure; extend technological leadership; ensure secure, safe and affordable energy; and reinforce external dimension. The objectives of this strategy are part of the Europe 2020 strategy and the“Resource Efficient Europe”initiative, with one specific goal to support the development of innovative new low-carbon technologies, including through Strategic Energy Technology Plan (SET-Plan) (EC, 2014e).

TheRenewable Energy Directive2009/28/EC (RED) on the promotion of renewable energy sources translated into legally-binding frameworks the energy targets for 2020: the share of renewable energy of 20% infinal energy consumption and 10% renewable energy in the transport sector (EU, 2009a). Fuel Quality Directive 2009/30/EC (FQD) set a target of a 6% GHG reduction for the fuels used in transport in 2020 (EU, 2009b). The RED and FQD include criteria for sustainable biofuel production and procedures for verifying that these criteria are met. The RED also includes a set of provisions to facilitate the development of renewable energy, such as a legal requirement for the MS to prepare National Renewable Energy Action Plans (NREAPs) with detailed roadmaps to reach the RES targets and measures taken to reach these targets and develop energy infrastructure. Bioenergy is expected to provide almost 60% of the renewable energy in 2020.

The Communication COM (2014) 15final onA policy framework for climate and energy in the period from 2020 to 2030has put forward an integrated policy framework for the period beyond 2020 and up to 2030 to drive progress towards a low-carbon economy (EC, 2014f). It aims to build a competitive energy system that increases the security of energy supply, reduces energy dependence and creates new opportunities for growth and jobs. The targets proposed for 2030 include 40% reduction of GHG emissions compared to 1990 levels and a share of renewable energy of at least 27% in thefinal energy consumption. The European Council Conclusions on 2030 Climate and Energy Policy Framework endorsed in October 2014 a binding EU target of 40% reduction in GHG emissions by 2030 compared to 1990, a binding target of at least 27% for the share of renewable energy in 2030 and a 27% energy efficiency indicative target (European Council, 2014).

The Energy Roadmap 2050 (COM(2011) 885), investigated possible pathways for a transition towards a decarbonisation of the energy system, while ensuring energy security and competitiveness, and the impacts, challenges and opportunities for modernizing the energy system (EC, 2011e). A number of energy scenarios to achieve an 80% reduction in greenhouse gas emissions and about 85% reduction of energy-related CO2emissions have been examined. According to the decarbonisation scenarios of the Energy Roadmap 2050, it needs to achieve significant reductions in greenhouse gas emissions already in 2030 (57–65%) and to reach near-complete decarbonisation by 2050 (96–99%). RES are the key in any decarbonisation strategy. The share of renewable energy rises substantially in all scenarios to 28–31% in 2030 and 55–75% in the High RES scenario in 2050. The share of renewables in transport is expected to increase to 19–20% in 2030 and to 62–73% in 2050. Bioenergy is expected to have an important role within the long-term goal to become a competitive low carbon economy according (EC, 2011e).

2.3. Agriculture,fisheries and forestry

Launched in 1962, the Common Agricultural Policy (CAP) provides the overall EU framework for food production (EC, 2014b), with the aim to increase agricultural productivity; to ensure a fair standard of living for farmers; to secure the food supply; to stabilise markets; to provide affordable food. Agricultural support is provided by means of direct payments, through the European Agricultural Guarantee and Guidance Fund (EAGGF), set up in 1962. Farmers have to respect the cross compliance rulesincluding food safety standards, environmental protection, animal welfare and the maintenance of land in good environmental and agricultural condition. The rural development was introduced as a second pillar of the CAP, to improve the competitiveness of farming and forestry, to protect the environment and the countryside, to diversify the rural economy and to support rural development. The CAP funding comes now under Heading 2 of the multi-annual framework

(_‘Sustainable growth_—natural resources_’). The new CAP reform of 2013 seeks to strengthen the competitiveness of the agricultural sector, promote innovation, combat climate change and support the development of rural areas. The main objectives, as set in the Communication COM(2010) 672

finalThe CAP towards 2020: Meeting the food, natural resources and territorial challenges of the future, would be: (1) viable food production; (2) sustainable management of natural resources and climate action; and (3) balanced development of rural areas. Significant importance is given to fostering green growth through innovation, in the context of the emergingbioeconomy. In this framework, support could be directed to capacity building for the bio-based economy. Six priorities were formulated for rural development and the agriculture, forestry and rural areas: (1) fostering knowledge transfer and innovation; (2) enhancing competitiveness; (3) promoting food chain organisation (4) restoring, preserving and enhancing ecosystems; (5) promoting social inclusion and economic development. Of these, one priority directly relates to promoting resource efficiency and supporting the shift toward a low-carbon and climate-resilient economy (EC, 2010a).

The Common Fisheries Policy (CFP) is the EU instrument for the management of fishing and aquaculture. It sets limits forfishing activities and restrictions for the size offishingfleet, to achieve a better balance between thefishing capacity and resources to ensure the sustainable exploitation of

fisheries resources (EC, 2014c). The CFP aims to help producers get a fair price and ensure that certain health and safety conditions and fulfilled. Funding for the modernisation of thefishingfleet was made available through the Financial Instrument for Fisheries Guidance (FIFG) during 2000–2006 and the European Fisheries Fund (EFF) in the period 2007_–2013 (Eurostat, 2013). The EU aquaculture and seafood processing industry has the potential to contribute to the‘marine pillar’of the bioeconomy, and to open up new markets for bio-based products and biofuels based on aquatic biomass (such as algae, etc.).

There is no common forestry policy for the EU; rather, the MS have their own national forestry policies. A newEU Forest Strategy for forests and the forest-based sector(COM(2013) 659final) provides a framework for the forest sector and related policies, such as rural development, climate change, resource efficiency, bioenergy, biodiversity, bio-based economy, etc. (EC, 2013). The Strategy identifies the key principles for the forestry sector: sustainable forest management; resource efficiency, rural development and economic growth; sustainable production and consumption of forest products. A major objective is to improve competitiveness of forest-based products and value chains to contribute to the bio-based economy. One of the eight priority areas are related tofostering the competitiveness and sustainability of the forest-based industries, bio-energy and the wider green economyThe role of bio-materials to mitigate climate, acting as carbon store or as carbon substitutes, replacing carbon-intensive materials and fuels is acknowledged. Another priority area addresses the development of new and innovative forestry and added-value products. The strategy underlines the role of an EU forest-based research area to stimulate innovation, to develop better forestry production systems and products and to enhance the sustainability and its contribution to the rural economy.

2.4. Industry

The European Commission developed the concept of the Knowledge-Based Bio-Economy (KBBE) in 2005 to develop a European bio-economy. It involves the replacement of fossil fuel feedstocks by renewable raw materials and the replacement of chemical processes by biological ones for the production of biological resources and their conversion into food, feed, bio-based products and bioenergy (Clever Consult, 2010;KBBE, 2014). Research in the area of KBBE has been promoted and

financed via the 7th Framework Research Programme and complemented by MS resources via Joint Programming Initiatives. The Knowledge Based Bio-Economy Network (KBBE-NET) high-level expert group has been established in 2006 to detail a coordinated approach for the development of a research policy for a KBBE, together with the Standing Committee on Agricultural Research (SCAR) (EC, 2014d).

European Technology Platforms (ETPs)were created for strengthening of the European Research Area (ERA), as ndustry-led initiatives aiming to concentrate research efforts and address fragmentation across the EU, to boost research in order to improve European competitiveness.

ETPs have developed their Strategic Research and Innovation Agendas (SRIA) and roadmaps for leading technologies to achieve long-term development. In the area of bio-based economy, several ETP were established, including: ‘European Aquaculture Technology and Innovation Platform_’(EATIP);_‘European Technology Platform for Global Animal Health_’(ETPGAH);_‘Food for Life’ ETP;‘Plants for the Future’ ETP;‘Forest based sector’ Technology Platform; ‘Farm Animal Breeding and Reproduction’ (FABRE) TP; TP ‘Organics’ for organic food and farming research (Cordis, 2014).

TheLead Market Initiative (LMI)identified market sectors that are important and where an early adoption of technological innovation is likely to have a large impact. Lead markets are highly innovative, high-growth potential markets with a strong technological and industrial base in Europe. The LMI aims to support industry-led innovation and the up-take by creating adequate legal and regulatory frameworks, setting standards, improving access to risk capital and providing support for research, in order to bring new products into the market (EC, 2007c,2009c). The Communication on the Lead Market Initiative (COM(2007) 860 final) indicated six sectors as lead markets: eHealth; protective textiles; sustainable construction; recycling;bio-based products; and renewable energies (EC, 2007d). The LMI includes non-food, based products and materials, such as plastics, bio-lubricants, surfactants, enzymes and pharmaceuticals, derived from biobased raw materials and processes based on biological systems. It excludes traditional paper and wood products, and biomass for bioenergy. An action plan is accompanying the LMI on bio-based products, deploying a set of policy instruments: legislation, public procurement, standardisation, labelling and certi_fication, and complementary ones. The Action plan describes the actions for the implementation of the LMI on bio-based products, for providing access to finance for research and for biorefinery pilot and demonstration plants.

The EC Communication‘Preparing for our future: Developing a common strategy for key enabling technologies in the EU’ (COM(2009)512) has identified the Key Enabling Technologies (KETs) that strengthen the EU’s industrial and innovation capacity to address societal challenges (EC, 2009d). The Commission defines KETs as ‘knowledge intensive and associated with high R&D intensity, rapid innovation cycles, high capital expenditure and highly skilled employment’(EC, 2009e). KETs are a priority within itsEurope 2020 strategyand itsflagship initiatives:Innovation Union(COM(2010) 546

final) (EC, 2010c), An Industrial Policy for the globalisation era (COM(2010) 614) (EC, 2010d) andA Digital Agenda for Europe(COM(2010) 245) (EC, 2010e). KETs are regarded as crucial for improving the competitiveness of European industries in the knowledge-based economy and the way toward a low carbon economy. Biotechnology has been identified as one of the KETs and priority areas and as the driving KET for the bioeconomy (EC, 2012). The activities envisaged include focusing innovation on KETs, promoting technology transfer, and joint strategic programming and demonstration projects. The“European strategy for Key Enabling Technologies—A bridge to growth and jobs”(COM(2012) 341

final) was set to boost the industrial production of KETs-based products (EC, 2012c). The strategy builds upon three pillars: technological research, product demonstration and competitive manu-facturing activities. The main strategy goals are focusing on research and innovation on KETs, streamlining investment onfinancing innovation in KETs within the regional policy, and prioritise EIB lending activities on KETs deployment.

The Eco-innovation initiative was launched in 2008 as part of the Entrepreneurship and Innovation Programme (2007–2013) and was developed to implement the Environmental Technologies Action Plan (ETAP) (EC, 2014g). Thse Eco-innovation Action Plan (EcoAP) seeks to boost the development of environmental technologies and market uptake, which aims at reducing impact on the environment and making better use of resources, while strengthening economic growth and competitiveness (EC, 2014h). Eco-Innovation (COM(2011) 899 final) promotes innovation activities aiming to achieve sustainable development and a more efficient and responsible use of natural resources (EC, 2011f). Eco-innovation projects are not research projects. Eco-innovation represents a key opportunity to maintain the eco-technology leadership and making EU’s economy even stronger and more competitive. A bio-based economy is also focused on these goals and overlaps with the eco-innovation initiative.

2.5. Research and innovation

Besides the policies in the areas of agriculture, forestry, energy, climate and industry, the policies on research and innovation were lately developed to stimulate the transition towards a bio-based economy. Research and Development (R&D) is one of the European Union’s priorities, at the heart of the Lisbon Strategy to boost employment and growth and to become the“most dynamic, competitive knowledge-based economy in the world”. The Communication Towards a European Research Area (COM(2000) 6final) proposed the creation of a European Research Area (ERA) to avoid fragmentation and duplication of research in the EU through better coordination and cooperation (EC, 2000). The research in the KBBE area is strengthened through theEuropean Research Area Networks (ERA-NETs), which provide a framework for networking, coordination and cooperation of national programmes for the development and implementation of joint programmes or activities. ERA-NET has promoted the exchange of best practice, combining ideas and resources and the developing transnational research activities. More than 40 ERA-NET projects under 6th and 7th Framework Research Programmes with relevance to the bioeconomy have been funded and threeJoint Programming Initiatives (JPI): (JPI-FACCE‘Agriculture, Food security and Climate Change’, JPI HDHL‘Healthy Diet for a Healthy Life’, JPI Oceans‘Healthy and Productive Seas and Oceans’) (Platform, 2014). ERA-Nets cover the cooperation in food,fisheries, animal health and welfare, plant genomics, systems biology, and biotechnology.

The Framework Programmes for Research are EU funding programmes created to support and foster research in the European Research Area (ERA). The 7th EU Framework Programme for Research (FP7) covered all EU research activities during the period 2007–2013 (EC, 2014i). It was complemented by the Competitiveness and Innovation Framework Programme (CIP) which supported innovation activities (including eco-innovation) during 2007–2013 (EC, 2014j). The broad objectives of FP7 have been grouped into four categories: Cooperation, Ideas, People and Capacities and specific programmes corresponding to the main areas of EU research policy. One of the research theme was ‘Food, Agriculture and Fisheries, and Biotechnology’, with the primary aim to build aKBBE, which is focused on three major activities addressing the developments in the bio-based economy: (1) sustainable production and management of biological resources; (2) fork to farm: food, health and well-being; (3) life sciences, biotechnology and biochemistry.

The EUfinancing in research and innovation will come during the period 2014–2020 from the new Horizon 2020Framework Programme (EC, 2014k). Horizon 2020 is a key pillar of theflagship initiative Innovation Union of the Europe 2020 Strategy, contributing toward enhancing Europe’s competitive-ness. Horizon 2020 consists of three main research areas:‘Excellent science’,‘Industrial Leadership’; and‘Societal challenges’. Horizon 2020 will also aim at developing closer synergies with other EU programmes (e.g. in education, competitiveness and SMEs) and funds, such as the structural and Cohesion Policy funds. The Framework Research Programme will be complemented by additional measures to develop the European Research Area.

2.6. Funding opportunities 2.6.1. Public funding options

Various funding sources on R&D, agriculture and forestry, industry and rural development could be utilised to foster the development of a bio-based economy. These funds do however not always specifically refer to the biobased economy, but they address areas which are directly related to it.

The EU Regional Policy offers support for rural areas and to the farm sector through the Structural Funds (SF) (made up of the European Regional Development Fund (ERDF) and the European Social Fund (ESF)) and the Cohesion Fund (CF). Structural funds could support investments in rural green infrastructure and research, such as regional and trans-regional clusters, poles of excellence, technology transfer and industry support to adapt to economic changes. The Structural Funds can also support measures on innovation and R&D, the competitiveness of SMEs for the deployment of technologies, processes and products and the shift towards a low carbon economy. The Key Enabling Technologies (KETs) are one of the investment priorities for theEuropean Regional Development Fund (ERDF)and are integrated into the regional policy. ERDF could support ‘technological and applied

research, pilot lines early product validation actions, advanced manufacturing capabilities_’(EC, 2014l). Together with the Common Agricultural Policy (CAP), the Structural Funds and the Cohesion Fund represent the majority of the EU budget. It was estimated that spending on forest-related measures during the 2007_–2013 period through the European Agricultural Fund for Rural Development amounted between€9 billion and€10 billion.

The Common Agricultural Policy (CAP) in the EU is financed by two funds: the European Agricultural Guarantee Fund (EAGF), which provides direct payments to farmers and finances measures to regulate agricultural markets, and the European Agricultural Fund for Rural Development (EAFRD), which provides funds for rural development (EC, 2014m). The CAP does not support investments in bio-based facilities; however, CAP could support the supply chain for improving feedstock economics and increasing biomass availability, by providing subsidies to farmers for biomass production and developing the infrastructure. However subsidies to change to energy crops are not available. With a budget of€303 billion for the period 2014–2020, direct payments represent a significant part of the EU’s agricultural and rural development budget. The European Fisheries Fund (EFF) was the financial instrument of Common Fisheries Policy (CFP), with a budget of around € 4.3 billion for 2007–2013. The EFF has been replaced by the European Maritime and Fisheries Fund (EMFF), which has a budget of around_€6.5 billion for the period 2014_–2020. The EMFF will support the rebuilding of thefish stocks and reducing the impact offisheries on the marine environment. The EMFF will also support growth in coastal communities and emerging maritime sectors (EC, 2014n).

The Eco-innovation Action Plan (EcoAP) targets speci_fic eco-innovation barriers and opportunities under the Innovation Unionflagship initiative of the 2020 Strategy. Support for the EcoAP activities is delivered through Horizon 2020 for R&D projects. Horizon 2020 has for example a budget of€3.2 billion for climate action and resource efficiency initiatives, which include eco-innovation. Specific support for the development and implementation of environmental policy and for environmental, nature conservation and climate action projects is provided through the EU Life funding instrument (EC, 2014k). The Competitiveness and Innovation Framework Programme - Entrepreneurship and Innovation Programme (CIP-EIP) supports projects in eco-innovation through three initiatives:

financial instruments, networking, and pilot and market replication projects. (EC, 2014o). A wider use of environmental technologies and investments in eco-innovation can also be supported by the structural and cohesion funds.

Horizon 2020 provides financial support for R&D activities, implementing the Europe 2020

flagship initiativeInnovation Union. It is the biggest EU research programme ever with a budget of almost€80 billion over 7 years (2014 to 2020). Research and innovation activities on bioeconomy are funded under ‘Societal Challenges’ (with a budget of €29.7 billion), in particular ‘Food security, sustainable agriculture, marine and maritime research, and the bioeconomy’(€3.9 billion). Other challenges–such as‘Climate action, resource efficiency and raw materials’,‘Secure, clean and efficient energy’,‘Health, demographic changes and well-being’,‘Inclusive and reflective societies’and‘Smart, green and integrated transport’ –can also provide the knowledge for the transition towards a bio-based economy (EC, 2014k). Horizon 2020 funds projects under the pillar‘Industrial Leadership’(€17.0 billion) to speed up the development of the technology and innovation that will support‘Leadership in enabling and industrial technologies’, including projects relevant to bioeconomy, as well as by providing access to riskfinance and supporting innovation in SMEs. A major component of this pillar are the KETs, with a budget of€6.7 billion, supporting pilot lines and demonstrator projects, for achieving technology and product validation and more integration between the KETs. The research and innovation under‘Excellent science’pillar (€24.4 billion), aiming to increase the excellence of the science base, could also contribute to advance toward bioeconomy, through support to frontier research, emerging technologies, career development, research training, and development of research infrastructures (EC, 2014k).

2.6.2. Funding instruments

TheStrategy Energy Technology Plan (SET Plan)(COM(2007) 723final) is the technology pillar of the EU’s energy and climate policy, being established for accelerating the development of low-carbon energy technologies, to achieve the 2020 energy and climate change goals and to contribute to the transition to a

low carbon economy (EC, 2007e). TheBioenergy Technology Roadmap of the SET Plan(SEC (2009) 1295) was set up as part of the seven Roadmaps on low carbon energy technologies including concrete actions aimed at the advancement in the technologies and achieving commercial deployment (EC, 2009f). The estimated budget for implementation is EUR 9 billion over 10 years. Within the SET-Plan, several European Industrial Initiatives were set to strengthen energy research and innovation and foster the development of key energy technologies. TheEuropean Industrial Bioenergy Initiative (EIBI)is one of the industrial initiatives launched in 2010, to address the techno-economic barriers to the development and commercial deployment of advanced bioenergy technologies (EIBI, 2014a). The EIBI aims at building and operating demonstration and/ orflagship plants for innovative bioenergy value chains (Technology Map 2013). At least 70% of the output of the biorefineries must be bioenergy and the remaining 30% can be biochemicals, biomaterials and other. The EIBI Implementation Plan for 2013–2017 describes the core activities aimed at building and operating demonstration and/orflagship projects, including the evaluation and selection criteria of the projects and Key Performance Indicators (KPIs) for monitoring the progress (EIBI, 2014b).

Public/private partnerships, involving industry, research community and public authorities, have been set up (COM(2013) 494) to pursue ambitious research objectives under Joint Technology Initiatives (JTIs),supporting large-scale multi-national research activities. JTIs are the Joint Under-takings (JUs), independent legal entities that manage research projects in strategic areas for research and innovation (EC, 2013b). JUs organise calls for proposals, oversee selection procedures and conclude contractual arrangements for projects set up to implement the Strategic Research Agendas (SRAs) of European Technology Platforms (ETPs). Seven JTIs have been set up, including_‘Innovative Medicines Initiative (IMI)’,‘Fuel Cells and Hydrogen’ (FCH), and‘Bio-Based Industries’ (BBI) Joint Undertaking. The Bio-based Industries JTI has been identified as a new initiative on bioeconomy. The BBIis a new Public-Private Partnership between the EU and the Bio-based Industries Consortium established to increase the investment in the bio-based industry in Europe. The BBI Joint Undertaking aims to mitigate the market barriers for investment into research, demonstration and deployment activities for bio-based industries and helps to achieve critical mass in terms of scale of activity, excellence, and potential for innovation. It foresee€3.8 billion investments in bio-based innovation from 2014–2020 (Horizon 2020), of which€1 billion of EU funds (Horizon 2020) and€2.8 billion of private investments (BBI, 2014).

NER300 is an EU funding programme for innovative low-carbon energy demonstration projects, in particular for carbon capture and storage (CCS) and innovative Renewable Energy Sources (RES) technologies (EC, 2014p). The programme covers CCS technologies (pre-combustion, post-combus-tion, oxyfuel, and industrial applications) and RES technologies (bioenergy, concentrated solar power, photovoltaics, geothermal, wind, ocean, hydropower, and smart grids). NER300 is funded from the sale of 300 emission allowances from the New Entrants’Reserve (NER) set up for the third phase of the EU emissions trading system (EU, 2009c). Through thefirst call, about€1.2 billion were provided in 2012 (additional €2 billion expected from private sources) to 20 projects on bioenergy, concentrated solar power and geothermal, wind, ocean power and smart grids. Under the second award decision in July 2014 a total of€1 billion were provided (additional€860 million from private sources) to 18 renewable energy projects. According to the European CouncilConclusions on 2030 Climate and Energy Policy Framework(October 2014), the NER300 facility will be renewed (NER400), with the scope extended to‘low carbon innovation in industrial sectors’ and the initial budget increased to 400 million allowances (European Council, 2014).

2.6.2.1. Loans and loan guarantees. The European Investment Bank (EIB), the EU’sfinancing institution, supports the implementation of EU’s policy objectives byfinancing viable capital projects. EIB support projects along six priorities, as defined: Small and Medium Enterprises (SMEs); regional development; environmental sustainability (climate action and urban and natural environment); innovation; trans-European networks; and energy. EIB loans can be combined with EU grants for individual project, in line with the overall EU policies. The EIB provides loans and guarantees for projects which are closer to the market, such as pilot lines, demonstration plants and investments in innovative assets related to production facilities.

The Risk Sharing Finance Facility (RSFF), managed by the EIB, offered funding for higher-risk research and innovation (including infrastructure) projects in the area of KETs, which have a strong European dimension. TheRisk-Sharing Instrument (RSI)was a pilot guarantee scheme, as part of the RSFF, managed by the European Investment Fund (EIF) under the FP7, aiming at improving access to debtfinance for research projects. The Risk-Sharing Finance Facility provided€11.3 billion funding for research projects and provided over€1.4 billion as loan guarantees. The‘InnovFin—EU Finance for Innovators’ was launched by the European Commission and the EIB Group in the framework of Horizon 2020 to provide guarantees or direct loans (€24 billion available) to research and innovation projects. InnovFin aims to improve access to risk finance for research and innovation projects, research infrastructures; public-private partnerships and special-purpose projects promotingfi rst-of-a-kind, industrial demonstration projects (EIB, 2014).

3. Bioeconomy in the EU: State of play and potential

Europe has a number of well-established traditional bio-based industries, ranging from agriculture, food, feed, fibre, forest-based industries, including pulp and paper and wood products, to the biotechnology, chemical, biofuels and bioenergy industries. Bioeconomy is already one of the biggest and most important components of the EU economy and it was previously estimated at over € 2 trillion, providing 20 million jobs in 2009 (EC, 2012). Based on recent data, we estimate the bio-based economy turnover at about € 2.4 billion, including agriculture, food and beverage, agro-industrial products,fisheries and aquaculture, forestry, wood-based industry, biochemical, enzymes, biopharmaceutical, biofuels and bioenergy, with almost 22 million persons employed (Table 1).

Table 2 shows our estimate, based on Faostat data (Faostat, 2014), of the total biomass used worldwide, in Europe and in the European Union, including fodder, food crops, industrial crops, crop residues, wood, animal products and aquatic biomass. The data, however, does not include various waste generated, such as waste from food industry, food waste or other biogenic waste. The data shows that almost 15 billion tonnes of biomass were used worldwide in 2011, of which 4.2 billion tonnes for food, 3.7 billion tonnes for feed, 3.4 billion tonnes for processing (sugar, starch, vegetable oils and others in food industry and for materials) and 2.1 billion tonnes being used for energy.

For the European Union, we estimate that almost 2 billion tonnes biomass were used in total, including agricultural and forestry biomass, animal products and aquatic biomass. Of the total biomass of almost 2 billion tonnes of all biomass in the EU in 2011, 21% was used for food, 44% for feed, Table 1

Estimated contribution of the bio-based economy in the European Union in 2012. Source:Eurostat (2014).

Sector Annual turnover (€billion) Value added (€billion) Employment (1000 s)

Agriculture 404 157 10200

Food and beverage 1040 207 468

Agro-industrial products 231 62 2092

Fisheries and aquaculture 36.6 9.7 199

Forestry logging 42 22 636 Wood-based industry 473 136 3452 Bio-chemicals 50 120 Bioplastics 0.4 1.4 Biolubricants 0.4 0.6 Biosolvents 0.4 0.4 Biosurfactants 0.7 0.9 Enzymes 1.2 Biopharmaceuticals 30 50 142 Biofuels 16 132 Bioenergy 34 350 Total 2357 21790

19% for processing and 12% for energy production (Fig. 1top right panel). If the whole biomass from agriculture and forestry in the EU is considered (thus including agricultural crops, wood products, agricultural and forest residues), we estimate that from about 1.8 billion tonnes used in 2011, less than 13% was used for food, 49% for feed, 22% for processing and almost 14% for energy (biofuels, heat and electricity) production (Fig. 1top left panel).

Of the 1.2 billion tonnes of biomass coming from various crops (fodder, food and industrial crops) in the EU in 2011, about 220 million tonnes (18%) were used for food purposes, 747 million tonnes were used for feed (60%) and 179 million tonnes (vegetable oil, starch, sugar, etc.) were used for processing (14%) and 38 million tonnes for energy (mainly biofuels) production 3% (Fig. 1bottom left panel). The total use of agricultural crops for energy (biofuels production, represented just above 2% in the EU.

The waste from agricultural crops accounts for 23 million tonnes (not considering crop residues such as straw, leaves from sugar beet and residues from food processing), or just below 2% of total consumption of agricultural crops (Faostat, 2014). In addition, about 110 million tonnes vegetal and animal waste are generated from food processing, households and other sectors (Eurostat, 2014). For the total biomass coming from agriculture (thus including various crop residues) we estimate that about 1.5 billion tonnes were used in 2011, of which 15% for food, 58% for feed, 18% for processing and almost 5% for energy (biofuels, heat and electricity) production (Fig. 1bottom right panel).

3.1. Agriculture and food industry

Agriculture currently covers 174.1 million hectares of land or 40% of the total land area of the EU. Of this, about 103.9 million ha are arable land, 59.1 million ha are permanent grassland and meadow and 10.7 million ha permanent crops. The output value of the EU’s agricultural industry at producer prices, comprising the output values of crops and animals, agricultural services and the goods and services produced from non-agricultural secondary activities was estimated to€404 billion in 2012 (Eurostat, 2014) (Table 3). Gross value added at producer prices of the EU-28’s agricultural industry in 2012 was an estimated EUR 156.5 billion. There were 12.2 million farms across the EU in 2010. The agricultural labour input in the EU‑27 in 2012 was estimated at 10.2 million annual working units (equivalent to one person working fulltime for a whole year) (Eurostat, 2013).

Table 2

Biomass supply worldwide, in Europe and in the European Union in 2011. Source:Eurostat (2014).

World [million tonnes] Europe [million tonnes] European Union [million tonnes]

Cereals 2318 413 279 Starchy Roots 796 129 60 Sugar Crops 2093 197 126 Pulses 68 7 4 Treenuts 15 3 2 Oilcrops 541 84 61 Vegetables 1,082 105 68 Fruits 632 100 80

Stimulants and spices 28 6 4

Food crops 7573 1043 684 Fibre crops 35 0 0 Fodder crops 1078 573 564 Crops 8686 1616 1248 Crop residues 2359 323 212 Agricultural biomass 11044 1940 1460 Wood 2389 446 290

Agriculture and forest biomass 13434 2386 1750

Meat and animal products 1153 279 200

Aquatic biomass 181 21 14

12.5% 48.6% 21.5% 0.9% 1.4% 1.3% 13.7%

The use of biomass from agriculture and forestry

food feed processing seed other waste energy 20.8% 44.1% 19.2% 0.8% 1.6% 1.2% 12.2% Total biomass food feed processing seed other waste energy 17.6% 59.9% 14.4% 1.2% 2.0% 1.8% 3.1%

Biomass from agricultural crops

food feed processing seed other waste energy 15.0% 58.3% 17.5% 1.1% 1.7% 1.6% 4.8% Agricultural biomass food feed processing seed other waste energy

Fig. 1.The use of biomass in the EU in 2011 (Source:Faostat, 2014). See text andTable 2for definitions.

Table 3

Main indicators for agricultural industries in the European Union, 2012. Source:Eurostat (2014).

Turnover (€

billion)

Value added at factor cost (€billion) Number of enterprises (1000 s) Number of persons employed (1000 s) Agriculture 404 157 12200 10200 Food products 890 169 262 4,091

Vegetable and animal oils and fats

51 4 8 59

Starch and starch products

10 2 0 16

Sugar 13 4 0 21

Beverages 150 38 24 377

Food and beverage 1040 207 286 4468

Tobacco products 30 7 0 33

Textiles 80 22 60 621

Wearing apparel 73 21 126 1015

Leather and related products

47 12 36 422

Industrial products 231 62 223 2092

With a turnover of_€1040 billion, a value added of_€207 billion and 4.5 million people employed in almost 286,000 companies, the food and beverage industry is one of the largest and the most important manufacturing sectors in the EU (Eurostat, 2014). There is a wide range of food and beverage products that are made available for human consumption and animal feed, as well as a range of inputs for non-food processes. The industrial products derived from agriculture worth additional€ 231 billion and a number of 2.1 million persons employed in the EU.

From a total amount of 684 million tonnes of food crops used in the EU in 2011 (including cereals, starchy roots, sugar crops, pulses, treenuts, oilcrops, vegetables, stimulants and spices), about 220 million tonnes (32%) were used for food purposes, 183 million tonnes were used for feed and 191 million tonnes were used for processing. About 27 million tonnes were used for energy (biofuels production, representing less than 4% of total food crop use in the EU (Fig. 2).

The production of cereals (including rice) in the EU was estimated to be 285 million tonnes in 2012. This represented about 12% of global cereals production (Faostat, 2014), making the EU one of the world’s biggest producers of cereals. The largest share of cereals is used for feed (more than 60%) and food (23%). A share of cereals is also used for processing (3.5%) and another for biofuels (ethanol) production (3%).

Vegetable oil is produced from different raw material crops and oilseed crops experienced a significant growth between 2000 and 2012 with rape and turnip rape (20 million tonnes in 2012), and sunflower (7 million tonnes in 2012) being the main types of oilseeds that are produced in the EU. However, signi_ficant amounts of oilseeds are imported, domestic production representing only about 70% of the total consumption in the EU and with the import of vegetable oil (palm oil, etc.) playing an important role. The largest proportion of oilseeds (including domestic and imported) is used for processing and the production of vegetable oils (59%) and about 29% is used for biofuels (biodiesel) production (Fig. 3).

The EU produced 125 million tonnes of sugar crops in 2012, of which 116 million tonnes of sugar beet (Eurostat, 2013). Sugar beet production in the EU is managed by a system of production quotas, minimum price guarantees and trade measures designed for sugar. Almost 85% of sugar crops were used for processing in the food industry while we estimate that in 2012, (based onEurostat, 2014; Faostat, 2014;USDA, 2013) about 9.6% of sugar crops (12 million tonnes) were used in the biofuel sector in 2012 (Fig. 3).

The EU starch industry, with an annual turnover of about €7.7 billion, has been producing for decades bio-based products that are used in food, non-food, and feed applications (Eurostat, 2013), including hundreds of products used in the chemical, cosmetics, textile, paper, plastics and detergent industries. In 2012, the EU starch industry produced about 10 million tonnes of starch from 23 million tonnes of agricultural raw materials, of which 7.7 million tonnes of maize, 7.8 million tonnes of wheat, and 7.5 million tonnes of potatoes. The EU uses 8.9 million tonnes of starch, of which 62% in food, 1% in feed and 37% in non-food applications, mainly paper making and 5 million tonnes of starch by-products

32.1% 26.8% 28.0% 3.9% 2.2% 3.7% 3.3%

The use of food crops in the EU

food feed processing energy seed other waste 22.7% 60.2% 3.5% 3.1% 3.6% 4.5% 2.3% The use of cereal crops

food feed processing biofuels seed other waste

(Starch Europe, 2014;Faostat, 2014). The starch by-products include oil,fibres and proteins, which are used for both animal and human nutrition (Fig. 4).

3.2. Fisheries and aquaculture

The EU is one of the biggestfishery producers in the world, accounting for about 3.5% of global

fisheries and aquaculture production. The total production of fishery products (catches and aquaculture) in the EU was estimated at 6.4 million tonnes of live weight equivalent in 2011 (Eurostat, 2013). The European Union accounts for just above 5% of total fisheries production worldwide, which is a decrease compared to previous years. About onefifth of the EU’s totalfishery production comes from aquaculture with a production of 1.3 million tonnes of live weight in 2011. The EUfishingfleet had steadily decreased in the last years from a number of 104,000 vessels in 1995 to about 82,000 vessels in 2012 with a combined gross tonnage of 1.7 million tonnes. According to DCF data, the EU fishing fleet generated an income of €7.2 billion in 2011, with a gross value added generated by the EUfishingfleet in 2011 of€3.4 billion and 98,560 number of persons employed in 2011 (in full time equivalents) (Table 4).

Aquaculture (marine and freshwater) is an important activity in the EU in economic terms with a turnover of roughly€4.0 billion and about 28,000 employees. Its share of total world aquaculture production is 1.5% in terms of volume and almost 4% in terms of value. The total number of companies

3.1% 7.0% 58.5% 28.9% 0.5% 0.8% 1.2%

The use of oilcrops

food feed processing biofuels seed other waste 0.2% 84.8% 9.6% 5.4%

The use of sugar crops in the EU

feed processing biofuels other waste

Fig. 3.The use of oil crops and sugar crops in the European Union (Source:Faostat, 2014).

33.5%

33.9% 32.6%

Feedstock use for starch production

maize wheat potatoes 32.0% 30.0% 5.0% 28.0% 4.0% 1.0% The use of starch

confectionary processed food pharma and chemicals paper non-food feed

with aquaculture in the EU was estimated between 14,000 and 15,000. The Gross Value Added for the EU aquaculture sector was estimated to be more than 1.5 billion Euros in 2011 (STECF, 2013) while the

fish processing sector in the EU accounted for about_€29.4 billion of income and a Gross Added Value of more than€6.3 billion, employing around 100,000 people in 3500 enterprises.

3.3. Forestry

The EU’s wood-based industries cover a range of forestry downstream activities, including woodworking industries, furniture industry, pulp and paper manufacturing and the printing industry. The wood-based industries are a very important EU economic sector, with a production value of€456 billion, and an added value of around€ 136 billion and about 3.5 million jobs (Eurostat, 2014). Additional 0.6 million people are employed in forestry and logging operations (Table 5). The EU has a total forest area of about 179.5 million ha (around 42% of the EU area and approximately 5% of the world’s forests), of which 135.0 million ha are available for wood supply; the forested area of the EU is slowly increasing. The growing stock of forest and other wooded land in the EU-28 totalled some 24.4 billion cubic metres (over bark) in 2010 and the net annual increment in forests available for wood supply to about 776 million cubic metres (Eurostat, 2013).

From a theoretical biomass potential from European forests of 1277 million m3per year in 2010, (stemwood, stumps, logging residues and biomass from thinnings), the biomass potential from forests was estimated at 747 million m3_{per year in 2010 (under the medium mobilisation scenario). For 2030,} the biomass potential from forest was estimated at 733 million m3 in the medium mobilisation scenario, but it range between 625 million m3 _{and 898 million m}3_{per year in different scenarios} (EUWood, 2010) (Table 6).

According toEurostat, 2014, about 423 million m3_{per year was removed from forests in the EU in} 2012. The domestic use of woody biomass was estimated at 577 million m3_{in 2010, including 544} million m3_{from forests (roundwood and forest residues) and 33 million m}3_{from landscape wood} (Mantau, 2012). Of this amount, the pulp and paper sector uses 108 million m3_{woody biomass, the} wood processing industry) uses 261 million m3 _{and 209 million m}3 _{is used directly for energy} production.

Forest industry is a good example of the cascade use of wood; wood is used/reused several times in different processes and important amounts of wood and paper are recovered and recycled. Thus, the total supply of woody biomass in the EU in 2010 was calculated at 994 million m3_{, considering} multiple uses of wood, industrial residues and recycled material from wood products. Of this amount, 457 million m3wood were used to produce materials in the EU in 2010, of which 142 million m3for pulp production and 315 million m3_{for wood products. Significant amounts of wood residues are} generated and recycled across during wood processing (176 million m3_{), which are reused to produce} various products (wood based materials, pulp and paper) and generate energy (Mantau, 2012). At the end of the production cycle, about 60% of wood used in wood processing is used for energy generation (Fig. 5).

Table 4

Main indicators offisheries and aquaculture in the European Union in 2012. Source:Eurostat (2014),STECF (2013).

Turnover (€

billion)

Value added at factor cost (€

billion)

Number of enterprises (1000 s)

Number of persons employed (1000 s) Fisheries 7.2 3.4 82n ₉₉ Aquaculture 4.0 1.5 14.5 28 Processing 29.4 6.3 3.5 100nn Fishery industry 36.6 9.7 85.5 199 n_{Number of vessels.} nn_{Full time equivalents.}

3.4. Bioenergy production 3.4.1. Biofuels

The mandatory targets for the use of renewable energy in transport has boosted the use of biofuels in the EU reaching 564 PJ in 2012. The NREAPs forecasted a use of biofuels of about 1216 PJ Mtoe in 2020, representing more than 90% of the renewable energy expected to be used in transport (Ecofys, 2012;Banja et al., 2013). The global market for biofuels has increased significantly from€13 billion in 2005 to almost€60 billion in 2011. In the EU, we estimate biofuel market at about€15.7 billion in Table 5

Main indicators for wood-based industries in the EU in 2012. Source:Eurostat (2014).

Turnover (€billion)

Value added at factor cost (€billion)

Number of enterprises (1000 s)

Number of persons employed (1000 s)

Forestry and logging 42 22 636

Wood and wood products 121 32 185 1015

Pulp, paper and paper products

175 42 20 650

Printing and printing related activities

84 33 120 767

Furniture 93 29 126 1020

Wood based industry 473 136 451 3452

Forest-based industry 515 158 451 4088

Table 6

Wood biomass potential and the use of wood in the EU [m3

]. Source: EUWood (2010),Mantau (2012).

Wood biomass potential 2010 2020 2030

Supply Forest 686 678 681 Wood 308 370 429 Total 994 1048 1110 Use Material 458 529 620 Energy 346 573 752 Total 804 1102 1372 43.0% 31.1% 22.6% 3.4%

Wood use for materials in the EU

sawmill industry

pulp and paper

panel industry

other uses

29.6%

9.8% 60.6%

Final use of wood in the EU

wood materials

paper

energy

2012. Considering the expected use of biofuels in 2020 in the transport sector, we estimate, based on the projections for price developments (Charles et al., 2013), that the biofuel market could increase to about€30 billion in 2020 in the EU. The NREAPs estimate that about 105 PJ lignocellulosic biofuels could be used in transport in 2020, but this depends on their commercial availability and prices. We estimate that the number of persons employed in the biofuels sector would increase from about 125,000 persons in 2012 to about 375,000 persons in 2020 (EurObservER, 2013;Charles et al., 2013). Today, biofuels are produced largely from food-crops (sugar and starch crops for bioethanol and oil crops for biodiesel). A recent European Council decision limited the use of conventional biofuels to 7% of the energy use in transport for 2020 (European Council, 2014); the rest should come from 2nd generation lignocellulosic biofuels. In the EU, bioethanol is produced from wheat (3.9 million tonnes), maize (4.1 million tonnes), sugar beet (12.1 million tonnes), barley (0.4 million tonnes) and rye (0.4 million tonnes). The bioethanol production capacity increased to about 8.5 billion litres per year in 2012, with an actual annual production of about 4.8 billion litres (2.4 Mtoe) or 57% of the total capacity. Biodiesel is the main biofuel used in the EU in transport, being produced from rapeseed (15.3 million tonnes), soybean (3.5 million tonnes), imported palm oil, recycled vegetable oil and animal fat (Fig. 6). The biodiesel production capacity increased to about 26.3 billion litres, with an annual production of about 10.5 billion litres (8.3 Mtoe) or 40% of the total capacity (EC, 2014q;USDA, 2013). A significant share of the feedstock for domestically produced biodiesel (rapeseed, soybean) came from import together with vegetable oil (mainly palm oil) is also used. Due to the cap on food crop-based biofuels, a further expansion of_first generation biofuels is not expected while lignocellulosic biofuels have not yet achieved commercial maturity.

In total, we estimate that about 40 million tonnes of biomass feedstock were used in 2012 to produce biofuels. Significant amounts of by-products of bioethanol and biodiesel were generated; about 3.5 million tonnes of Distillers Dried Grains (DDGs), and about 12 million tonnes of oil meals (which are both generally used for feed). For 2020, about 63 million tonnes of biomass feedstock alone could be used for food crop-based biofuels productions, based on the projections of the NREAPs. In addition about 15 million tonnes of lignocellulosic biomass (wood, straw, etc.) would be needed to produce lignocellulosic biofuels. The production of by-products from bioethanol and biodiesel in 2020 is expected to reach 20 million tonnes of Distillers Dried Grains (DDGs), and about 45 million tonnes of oil meals (some of which produced outside of the EU), respectively.

3.4.2. Bio-heat and bio-electricity

The contribution of biomass to energy generation in the EU is important and will further increase, as result of the renewable energy targets for 2020. Bioenergy production is expected to account for about 57% of the renewable energy use in 2020, of which 45% will consist in heat and electricity production from biomass and 12% will be provided by biofuels (Ecofys, 2012;Banja et al., 2013). In 2012, about 141 TW h electricity, about 3.0 EJ heat and about 565 PJ of biofuels came from biomass. A significant amount of biomass was used in households (1679 PJ) in 2012, mainly as traditional wood

18.8%

19.8%

1.8% 1.7% 57.9%

Feedstock use for bioethanol production in the EU

wheat maize barley rye sugar beet _65.9% 9.7% 8.4% 7.6% 4.0% 2.9% 1.4%

Feedstock use for biodiesel production in the EU

rapeseed oil palm oil recycled vegetable oil soybean oil animal fat sunflower oil other

fuel in the form of logs, round and split, for heat and hot water production increasing amount is also used an wood pellets. Based on the data from the progress reports (EC, 2014q) we estimate that about 280 million tonnes biomass was used for bioenergy, of which 240 million tonnes biomass was used for heating and electricity production. Of this, about 178 million tonnes came from forestry, 32 million tonnes from agriculture and about 30 million tonnes from waste. About 100 million tonnes of biomass was sources as direct supply of wood biomass from forests and other wooded land (forest fellings etc.) and about 78 million tonnes of biomass came as indirect supply of wood biomass (residues and co-products from wood industry etc.). From agricultural sector, about 40 million tonnes were originating from energy crops and 32 million tonnes from agricultural by-products, processed residues and

fishery by-products (our calculation from Progress reports).

Significant amount of electricity is expected to be generated from biomass (233 TW h) in 2020, while the heat derived from biomass should reach 3792 PJ (Ecofys, 2012;Banja et al., 2013). For 2030, the biomass electricity production is projected (Energy Roadmap 2050) to further increase to 360 TW h in 2050 in the reference scenario and up to 460–494 TW h in 2050 in different decarbonisation scenarios (EC, 2011e). Based on the projections made for 2020 on the use of biomass for energy generation, we estimate about 420 million tonnes biomass to be used for heating and electricity production. Of this, about 224 million tonnes came from forestry, 136 million tonnes from agriculture and about 60 million tonnes from waste. About 144 million tonnes of biomass is expected to come as direct supply of wood biomass from forests and other woodland (domestic and import) (forest fellings etc.) and about 80 million tonnes of biomass will be provided by indirect supply of wood biomass (residues and co-products from wood industry etc.). From agricultural sector, about 84 million tonnes could come from energy crops and 52 million tonnes from agricultural by-products, processed residues andfishery by-products. The economic value of the bioenergy production (heat and electricity) in the EU in 2012 was estimated at€34 billion (EurObservER, 2013) and we estimate that this could grow to € 44 billion in 2020, based on the NREAPs projections for bioenergy production. The bioenergy sector employed almost 350,000 people in the EU in 2012, we estimate to grow to about 450,000 people in 2020. Table 7shows the current use of biomass for bioenergy production (electricity, heating and biofuels) and the expected demand for 2020, we estimated on the basis of the MS progress reports and NREAPs projections.

3.5. Bio-based industries

The contribution of biotechnology to EU economic performance is currently modest, but growing rapidly. Biotechnology makes use of biological systems and processes to manufacture various products covering a range of sectors: industry (white biotechnology), medicine (red biotechnology), agriculture (green biotechnology), aquaculture (blue biotechnology). Biotechnology has multiple industrial applications including the manufacture of chemicals,fine chemicals and biopharmaceu-ticals, bio-polymers and bio-plastics, food, feed, detergents and biofuels.

Table 7

Biomass use for bioenergy in the European Union (million tonnes). Source: our calculation

2012 2020

Forestry biomass 178 224

Wood biomass (wood fellings etc.) 100 144

Wood residues and co-products 78 80

Agricultural biomass 72 136

Energy crops 40 84

Agricultural by-products/residues 32 52

Waste 30 60

3.5.1. Biochemicals

The global chemistry market was estimated at the€3127 billion in 2012 and to $4012 billion by 2020. The European chemical industry holds a strong position, with a market of€673 billion, of which €558 billion in the European Union, but with a market share declining due to the increase of global market (Cefic, 2014a). Chemical industry produces a wide range of products, such as base chemicals (petrochemicals and basic inorganics), polymers (plastics, synthetic rubber, fibres), specialty chemicals (auxiliaries for industry, paints and inks, crop protection, dyes and pigments) and consumer chemicals (and detergents as well as perfumes and cosmetics). From the market point of view, industrial biotechnology has a larger long-term business potential than red biotechnology. It is estimated that more than 20% of all chemicals coming from the traditional chemistry sector could be produced by biotechnological means in 2020 (Meyer and Werbitzky, 2011).

There are already several bio-based products on the market and in the EU, the chemical industry has used about 8.6 million tonnes of renewable raw materials in 2011 in comparison with 90 million tonnes of feedstock used to produce various chemical substances (Cefic, 2014b). The renewable raw materials include vegetal oils and animal fats, carbohydrates, sugar and starch, natural rubber, etc. (EC, 2012b) (Fig. 7).

The sales of chemicals based on industrial biotechnology were estimated at around_€48 billion in 2007 (3.5% of total chemical sales) and increased in 2010 to around€100 billion (6% of chemicals) and was expected to increase to 135–150 billion Euro in 2012 (9% of chemical market) and to€515 billion until 2020 (Riese, 2009;Festel Capital, 2010). The percentage of products derived from biotechnological processes will increase in all market segments: base chemicals will increase from€16 billion in 2010 to€71 billion in 2020, polymers andfibers will increase from€19 billion to€167 billion, specialty chemicals will reach€89 billion from€22 billion, consumer chemicals will grow from€18 billion to€104 billion and active pharma ingredients from€16 billion to€83 billion. The share of biochemicals was estimated to be 3.5% in the case of biobased products, 9% in the case of specialty chemicals, 12% for consumer chemicals and 34% for active pharma ingredients. Overall, the share of biochemicals could reach between 20% and 22%, depending on the development of technologies, feedstock prices and policy framework (EC, 2013c), of which about 20% of base chemicals (including polymers andfibres), 15% of specialty chemicals, about 25% consumer chemicals and more than 50% of active pharma ingredients (Fig. 8) (Festel Capital, 2012). For the EU, it was estimated that up to 30% of oil-based chemicals and materials would be replaced with bio-based ones by 2030 (BBI, 2014).

3.5.2. Bio-plastics

In the past, plastics have been fully derived from oil products, but there is a significant expansion of the biobased plastics. Bio-plastics (both as biodegradable and non-biodegradable polymers) are used in multiple applications, such as packaging, consumer goods and household appliances, agriculture/ horticulture, consumer electronics, and automotive (Biochem, 2010;European bioplastics, 2012). Most plastics are currently produced from food crops feedstock, such as maize. On a longer term,

bio-27.7

15.2

20.7 25.4

11.5

Chemical industry market by sector

petrochemicals basic innorganics polymers specialty chemicals consummer chemicals 18% 6% 10% 18% 19% 14% 6% 9%

The use of bio materials in chemical industry

vegetal oil

animal fat

chemical pulp

starch and sugar

bioethanol

natural rubber

glycerol

others